Dubai Taxi Company (DTC) has announced the launch of its initial public offering (IPO), offering 624.75 million shares, which represents 24.99% of its capital. The share price range is set to be revealed on November 21, marking the start of the subscription period that will end on November 28 for UAE retail investors and November 29 for professional investors, with trading expected to commence on the Dubai Financial Market on December 7.
This move by DTC is part of a broader strategy to diversify its portfolio within the Roads and Transport Authority's (RTA) divestment plans, which include an expansion into autonomous vehicles and vehicle rental services. The Department of Finance for the Government of Dubai retains the right to alter the offering size or tranche allocations. Notably, the offering has been confirmed as Shariah-compliant by Emirates NBD Bank PJSC.
Key institutions such as the Emirates Investment Authority and the Pensions and Social Security Fund of Local Military Personnel are each set to invest 5% in this IPO. Moreover, DTC has outlined plans to issue bi-annual dividends starting from 2024, with an initial dividend of at least 71 million dirhams ($19.3 million) expected in April 2024.
DTC boasts a dominant position in Dubai's transportation sector with a market share of 44%, operating more than 7,000 vehicles including taxis, limousines, buses, and delivery bikes. For the nine months ending September 30, 2023, the company reported significant revenue growth of 11.1%, an EBITDA margin of 25.5%, and a net income margin of 18.9%.
The company's financial performance is underpinned by its extensive operations, having made 44 million trips between July 1, 2022, and June 30, 2023. Retail investors are offered access to 10% of the issue size with a minimum subscription requirement of Dh5,000 and increments of Dh1,000 thereafter. Each subscriber to the first tranche is guaranteed a minimum allocation of 2,000 shares.
Rothschild & Co Middle East Limited is serving as the independent financial advisor for this IPO. A consortium including Citigroup Global Markets Limited, Emirates NBD Capital PSC, Merrill Lynch International, EFG-Hermes UAE Limited (in conjunction with EFG Hermes UAE LLC), and First Abu Dhabi Bank PJSC are acting as joint global coordinators and bookrunners for the offering.
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